Gold trader gets Dubai licence to trade and store cryptocurrencies

The licence allows the company to store bitcoin, ethereum and other alternatives to the best-known digital currencies in a vault located in the headquarters of the commodities free zone. — Reuters pic

DUBAI, Feb 13 — Gold trader Regal RA DMCC has become the first company in the Middle East to be awarded a licence by the Dubai Multi Commodities Centre (DMCC) to trade in cryptocurrencies.

The licence allows the company to store bitcoin, ethereum and other alternatives to the best-known digital currencies in a vault located in the headquarters of the commodities free zone, DMCC said in a statement today.

The vault will have no connection to a network and physical devices are fully insured for the crypto-commodities market value against theft, hacking or natural disaster, it said. Crypto-commodities are those that trade in bitcoin.

Cyber theft is seen as a major risk for bitcoin trading, highlighted by last month’s heist of about US$530 million (RM2 billion) from a Tokyo-based exchange, a theft rivalling Mt. Gox’s as one of the biggest ever for digital currency.

There have been increasingly loud warnings around the world about the dangers of investing in cryptocurrencies, which remain largely outside the regulatory net.

However, Regal RA DMCC’s announcement came as the regulator of Abu Dhabi’s international financial centre said this week it could create rules for exchanges handling virtual currencies, in a sign that authorities in the United Arab Emirates may allow trade in cryptocurrencies to develop.

Regal RA DMCC, is a subsidiary of Regal Assets, an alternative asset firm which has offices in the United States, Canada and the United Arab Emirates.

Dubai is a major hub for gold trading, thanks to its proximity to the world’s largest gold consumer, India.

“At the heart of DMCC’s long term strategic growth plan is the use of technology and innovation to disrupt and connect new markets, industries and customers,” said Ahmed Bin Sulayem, executive chairman, DMCC.

Elsewhere in the Gulf, many regulators are wary of cryptocurrencies. The Saudi Arabian central bank has advised people not to trade bitcoin, and last week, Qatar’s central bank told banks not to deal in any way with cryptocurrencies.

Yesterday, the European Union’s banking, securities and insurance watchdogs warned that virtual currencies such as bitcoin have shown clear signs of a pricing bubble and consumers could lose all their money. — Reuters